Hi,
My parents i94 expires on Aug 30 and I'm planning to apply for an extension this week until Oct 30.
If the extension is not adjudicated before Oct 30 and they leave, What happens to the I539? Is it considered abandoned? Is the current 10-year visa 'canceled' due to I539 abandonment?

I don't think you need a Visa to re-enter the USA if you are visiting Canada/Mexico for less than thirty days. Automatic Revalidation' rules permit such travel.
https://travel.state.gov/content/visas/en/general/automatic-revalidation.html